Budget 2014-2015
Speech of
Arun Jaitley
Minister of Finance
July 10, 2014
Madam Speaker,
I rise to present the Budget for the year 2014-15.
I. STATE OF THE ECONOMY
2.
The people of India have decisively voted for a change. The verdict represents the
exasperation of the people with the status-quo. India unhesitatingly desires to grow. Those
living below the poverty line are anxious to free themselves from the curse of poverty. Those
who have got an opportunity to emerge from the difficult challenges have become
aspirational. They now want to be a part of the neo middle class. Their next generation has
the hunger to use the opportunity that society provides for them. Slow decision making has
resulted in a loss of opportunity. Two years of sub five per cent growth in the Indian
economy has resulted in a challenging situation. We look forward to lower levels of inflation
as compared to the days of double digit rates of food inflation in the last two years. The
country is in no mood to suffer unemployment, inadequate basic amenities, lack of
infrastructure and apathetic governance.
3.
The slowdown in India broadly reflects the trend in many economies. In contrast to
the aftermath of the crisis of 2008-09 when restoration of growth in advanced economies was
the primary concern, the continuing slowdown being presently witnessed in many emerging
economies has posed a threat to a sustained global recovery. Fortunately, there are green
shoots of recovery being seen in the global economy. As per IMF, the world economy is
projected to grow at 3.6 per cent in 2014 vis-à-vis 3.0 per cent in 2013, with the Euro area
expected to register a positive growth after the contraction witnessed in 2012 and 2013.
However, the performance of the US economy with attendant implication for the
unconventional monetary policy stance and global financial conditions is pivotal to the fate of
global recovery in the coming years. These are the head winds against which the Indian
economy would have to maneuver its way to attain high growth trajectory.
4.
As Finance Minister I am duty bound to usher in a policy regime that will result in the
desired macro-economic outcome of higher growth, lower inflation, sustained level of
external sector balance and a prudent policy stance. The Budget is the most comprehensive
action plan in this regard. In the first Budget of this NDA government that I am presenting
before the august House, my aim is to lay down a broad policy indicator of the direction in
which we wish to take this country. The steps that I will announce in this Budget are only the
beginning of a journey towards a sustained growth of 7-8 per cent or above within the next 34 years along with macro-economic stabilization that includes lower levels of inflation, lesser
fiscal deficit and a manageable current account deficit. Therefore, it would not be wise to
expect everything that can be done or must be done to be in the first Budget presented within
forty five days of the formation of this Government.
5.
While higher growth is a sine qua non, we cannot be oblivious of the fact that there is
a large population of this country which is below the poverty line. It is the poor who suffer
the most. We have to ensure that our anti-poverty programs are well targeted. The growing
aspirations of the people will be reflected in the development strategy followed by the
Government led by the Prime Minister Shri Narendra Modi and its mandate of “Sab ka Saath
Sab ka Vikas”. Allow me to assure this House that we have taken up the challenge in the
right earnest. We shall leave no stone unturned in creating a vibrant and strong India.
6.
The prevailing economic situation presents a great challenge. It calls for a conscious
choice to be made by all of us. Should we allow this drift to carry on and watch helplessly?
Should we allow our future to suffer because of our indecisiveness? Should we be victims of
mere populism or wasteful expenditure? To me, the response and the remedy are both clear.
The task before me today is very challenging because we need to revive growth, particularly
in manufacturing and infrastructure to raise adequate resources for our developmental needs.
On the other hand, the task is simple if we accept the principle that we cannot spend beyond
our means. We need to introduce fiscal prudence that will lead to fiscal consolidation and
discipline. Fiscal prudence to me is of paramount importance because of considerations of
inter-generational equity. We cannot leave behind a legacy of debt for our future generations.
We cannot go on spending today which would be financed by taxation at a future date. There
is an urgent need to generate more resources to fuel the economy. For this, the tax to GDP
ratio must be improved and non-tax revenues increased. We must remember that the decline
in fiscal deficit from 5.7 per cent of GDP in 2011-12 to 4.8 per cent in 2012-13 and 4.5 per
cent in 2013-14 was mainly achieved by reduction in expenditure rather than by way of
realization of higher revenue. Although, the external sector witnessed a turn-around with the
year ending with a Current Account Deficit of 1.7 per cent of the GDP against 4.7 per cent in
2012-13, this was mainly achieved through restriction on non-essential imports and
slowdown in overall aggregate demand. Going forward, we must continue to be watchful of
the CAD.
7.
My predecessor has set up a very difficult task of reducing fiscal deficit to 4.1 per
cent of the GDP in the current year. Considering that we had two years of low GDP growth,
an almost static industrial growth, a moderate increase in indirect taxes, a large subsidy
burden and not so encouraging tax buoyancy, the target of 4.1 per cent fiscal deficit is indeed
daunting. Difficult, as it may appear, I have decided to accept this target as a challenge. One
fails only when one stops trying. My Road map for fiscal consolidation is a fiscal deficit of
3.6 per cent for 2015-16 and 3 per cent for 2016-17. I am conscious of the fact that Iraq crisis
is leaving an impact on oil prices and the situation in the middle-east continues to be volatile.
Monsoon this year appears more unpredictable. While inflation has remained at elevated
levels relative to what is perceived as acceptable, there has been a gradual moderation in WPI
recently, from a high of 7.35% in 2012-13 and 5.98% in 2013-14. But we are still not out of
the woods. We also must address fully the problem of black money which is curse of our
economy. Faced with these adversities we have no option but to undertake some bold steps in
order to enhance economic activity and spur growth in the economy. These steps are only the
beginning of our effort to revive the growth spirit of the Indian Economy. They are
directional.
Expenditure Management Commission
8.
My Government is committed to the principle of “Minimum Government Maximum
Governance”. To achieve this goal, time has come to review the allocative and operational
efficiencies of Government expenditure to achieve maximum output. The Government will
constitute an Expenditure Management Commission, which will look into various aspects of
expenditure reforms to be undertaken by the Government. The Commission will give its
interim report within this financial year. I also propose to overhaul the subsidy regime,
including food and petroleum subsidies, and make it more targeted while providing full
protection to the marginalized, poor and SC/STs. A new urea policy would also be
formulated.
GST
9.
The debate whether to introduce a Goods and Services Tax (GST) must now come to
an end. We have discussed the issue for the past many years. Some States have been
apprehensive about surrendering their taxation jurisdiction; others want to be adequately
compensated. I have discussed the matter with the States both individually and collectively. I
do hope we are able to find a solution in the course of this year and approve the legislative
scheme which enables the introduction of GST. This will streamline the tax administration,
avoid harassment of the business and result in higher revenue collection both for the Centre
and the States. I assure all States that government will be more than fair in dealing with them.
Tax Administration
10.
The sovereign right of the Government to undertake retrospective legislation is
unquestionable. However, this power has to be exercised with extreme caution and
judiciousness keeping in mind the impact of each such measure on the economy and the
overall investment climate. This Government will not ordinarily bring about any change
retrospectively which creates a fresh liability. Hon’ble Members are aware that consequent
upon certain retrospective amendments to the Income Tax Act 1961 undertaken through the
Finance Act 2012, a few cases have come up in various courts and other legal fora. These
cases are at different stages of pendency and will naturally reach their logical conclusion. At
this juncture I would like to convey to this August House and also the investors community at
large that we are committed to provide a stable and predictable taxation regime that would be
investor friendly and spur growth. Keeping this in mind, we have decided that henceforth, all
fresh cases arising out of the retrospective amendments of 2012 in respect of indirect
transfers and coming to the notice of the Assessing Officers will be scrutinized by a High
Level Committee to be constituted by the CBDT before any action is initiated in such cases. I
hope the investor community both within India and abroad would repose confidence on our
stated position and participate in the Indian growth story with renewed vigour.
Advance Ruling and Other Tax Related Measures
11.
Tax demand of more than ` 4 lakh crore is under dispute and litigation before various
Courts and Appellate authorities. This is one of the serious concerns of all taxpayers in this
country. In order to reduce litigation in direct taxes, I propose to make certain legislative and
administrative changes.
12.
Currently, an advance ruling can be obtained about the tax liability of a non-resident
from the Authority for Advance Rulings. This facility is not available to resident taxpayers
except Public Sector Undertakings. I propose to enable resident taxpayers to obtain an
advance ruling in respect of their income tax liability above a defined threshold. I also
propose to strengthen the Authority for Advance Rulings by constituting additional benches. I
further propose to enlarge the scope of the Income-tax Settlement Commission so that
taxpayers may approach the Commission for settlement of disputes. This would continue to
be once in a lifetime opportunity for any taxpayer.
13.
As an administrative measure, I propose to set up a High Level Committee to interact
with trade and industry on a regular basis and ascertain areas where clarity in tax laws is
required. Based on the recommendations of the Committee, the Central Board of Direct
Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications,
wherever considered necessary, on the tax issues within a period of two months.
14.
Transfer Pricing is a major area of litigation for both resident and non-resident
taxpayers. I have proposed certain changes in the Transfer Pricing regulations, which I would
spell out in Part-B of my speech.
15.
I hope these measures would go a long way in improving the confidence of taxpayers
in the tax system and would provide certainty and clarity in tax laws.
FDI
16.
The policy of the NDA Government is to promote Foreign Direct Investment (FDI)
selectively in sectors where it helps the larger interest of the Indian Economy. FDI in several
sectors is an additionality of resource which helps in promoting domestic manufacture and
job creation. India today needs a boost for job creation. Our manufacturing sector in
particular needs a push for job creation.
17.
India today is the largest buyer of Defence equipment in the world. Our domestic
manufacturing capacities are still at a nascent stage. We are buying substantial part of our
Defence requirements directly from foreign players. Companies controlled by foreign
governments and foreign private sector are supplying our Defence requirements to us at a
considerable outflow of foreign exchange. Currently we permit 26 per cent FDI in Defence
manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full
Indian management and control through the FIPB route.
18.
The Insurance sector is investment starved. Several segments of the Insurance sector
need an expansion. The composite cap in the Insurance sector is proposed to be increased up
to 49 per cent from the current level of 26 per cent, with full Indian management and control,
through the FIPB route.
19.
To encourage development of Smart Cities, which will also provide habitation for the
neo-middle class, requirement of the built up area and capital conditions for FDI is being
reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to
USD 5 million respectively with a three year post completion lock in.
20.
To further encourage this, projects which commit at least 30 per cent of the total
project cost for low cost affordable housing will be exempted from minimum built up area
and capitalisation requirements, with the condition of three year lock-in.
21.
FDI in the manufacturing sector is today on the automatic route. The manufacturing
units will be allowed to sell its products through retail including E-commerce platforms
without any additional approval.
Bank Capitalization
22.
Financial stability is the foundation of a rapid recovery. Our banking system needs to
be further strengthened. To be in line with Basel-III norms there is a requirement to infuse `
2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need
to raise additional resources to fulfill this obligation. While preserving the public ownership,
the capital of these banks will be raised by increasing the shareholding of the people in a
phased manner through the sale of shares largely through retail to common citizens of this
country. Thus, while the government will continue to have majority shareholding, the citizens
of India will also get direct shareholding in these banks, which currently they hold indirectly.
We will also examine the proposal to give greater autonomy to the banks while making them
accountable.
PSU Capital Expenditure
23.
To give a thrust to investment in the economy, PSUs will also play their part
constructively. I am assured that the PSUs will invest through capital investment a total sum
of ` 2,47,941 crores in the current financial year to create a virtuous investment cycle.
Smart Cities
24.
As the fruits of development reach an increasingly large number of people, the pace
of migration from the rural areas to the cities is increasing. A neo middle class is emerging
which has the aspiration of better living standards. Unless, new cities are developed to
accommodate the burgeoning number of people, the existing cities would soon become
unlivable. The Prime Minister has a vision of developing ‘one hundred Smart Cities’, as
satellite towns of larger cities and by modernizing the existing mid-sized cities. To provide
the necessary focus to this critical activity, I have provided a sum of `7,060 crore in the
current fiscal.
e-Visa
25.
Tourism is one of the larger job creators globally. Many economies world over are
supported by tourism. In order to give a major boost to tourism in India, the facility of
Electronic Travel Authorization (e-Visa) would be introduced in a phased manner at nine
airports in India where necessary infrastructure would be put in place within the next six
months. The countries to which the Electronic Travel authorisation facility would be
extended would be identified in a phased manner. This would further facilitate the visa on
arrival facility.
REITs & InvITs
26.
Real Estate Investment Trusts (REITS) have been successfully used as instruments for
pooling of investment in several countries. I intend to provide necessary incentives for REITS
which will have pass through for the purpose of taxation. As an innovation, a modified
REITS type structure for infrastructure projects is also being announced as Infrastructure
Investment Trusts (InvITs), which would have a similar tax efficient pass through status, for
PPP and other infrastructure projects. These structures would reduce the pressure on the
banking system while also making available fresh equity. I am confident these two
instruments would attract long term finance from foreign and domestic sources including the
NRIs.
Kissan Vikas Patra
27.
Kissan Vikas Patra (KVP) was a very popular instrument among small savers. I plan
to reintroduce the instrument to encourage people, who may have banked and unbanked
savings to invest in this instrument.
Skill India
28.
A national multi-skill programme called Skill India is proposed to be launched. It
would skill the youth with an emphasis on employability and entrepreneur skills. It will also
provide training and support for traditional professions like welders, carpenters, cobblers,
masons, blacksmiths, weavers etc. Convergence of various schemes to attain this objective is
also proposed.
Pradhan Mantri Krishi Sinchayee Yojana
29.
Bulk of our farm lands are rain fed and dependent on monsoons. Therefore, there is a
need to provide assured irrigation to mitigate risk. To improve access to irrigation we propose
to initiate the scheme “Pradhan Mantri Krishi Sinchayee Yojana”. I propose to set aside a
sum of ` 1,000 crore for this purpose.
Swatchh Bharat Abhiyan
30.
The need for sanitation is of utmost importance. Although the Central Government is
providing resources within its means, the task of total sanitation cannot be achieved without
the support of all. The Government intends to cover every household by total sanitation by
the year 2019, the 150th year of the Birth anniversary of Mahatma Gandhi through Swatchh
Bharat Abhiyan.
Shyama Prasad Mukherji Rurban Mission
31.
Gujarat has demonstrated successfully the Rurban development model of urbanization
of the rural areas, through which people living in the rural areas can get efficient civic
infrastructure and associate services. Shyama Prasad Mukherji Rurban Mission will be
launched to deliver integrated project based infrastructure in the rural areas, which will also
include development of economic activities and skill development. The preferred mode of
delivery would be through PPPs while using various scheme funds for financing.
Deendayal Upadhyaya Gram Jyoti Yojana
32.
Power is a vital input for economic growth and the Government is committed to
providing 24x7 uninterrupted power supply to all homes. “Deen Dayal Upadhyaya Gram
Jyoti Yojana” for feeder separation will be launched to augment power supply to the rural
areas and for strengthening sub-transmission and distribution systems. I propose to set aside a
sum of ` 500 crore for this purpose.
Statue of Unity
33.
Government of Gujarat has embarked upon the mission to build the largest statue of
Sardar Vallabh Bhai Patel. Sardar Patel stands as the symbol of the unity of the country. To
support the Gujarat Government in this initiative to erect the Statue of Unity, I propose to set
aside a sum of ` 200 crore.
II. PLAN & BUDEGTARY ALLOCATIONS
34.
I now turn to budgetary allocations. While announcing the allocations, I want to
reiterate my Government’s firm commitment to strengthen the federal structure of the country
and our resolve to work closely with the state governments for the larger good of the people.
Welfare of Scheduled Castes/Scheduled Tribes
35.
Government is committed to the welfare of SCs and STs. This year an amount of
`50,548 crore is proposed under the SC Plan and ` 32,387 crore under TSP.
36.
To provide credit enhancement facility for young start up enterpreneurs from
Scheduled Castes, who aspire to be part of the neo-middle class, I propose to set aside a sum
of ` 200 crore which will be operationalised through a scheme by IFCI.
37.
For the welfare of the tribals “Van Bandhu Kalyan Yojana” is being launched with an
initial allocation of ` 100 crore.
Welfare of Senior Citizens
Varishtha Pension Bima Yojana
38.
NDA Government during its last term in office had introduced the Varishtha Pension
Bima Yojana (VPBY) as a pension scheme for senior citizens. Under the scheme a total no.
of 3.16 lakh annuitants are being benefitted and the corpus amounts to ` 6,095 crore. I
propose to revive the scheme for a limited period from 15 August, 2014 to 14 August, 2015
for the benefit of citizens aged 60 years and above.
39.
A large amount of money is estimated to be lying as unclaimed amounts with PPF,
Post Office, saving schemes etc. These are mostly out of investments belonging to the senior
citizens and on their demise, remain unclaimed for want of relevant payment instructions. I
propose to set up a committee to examine and recommend how this amount can be used to
protect and further financial interests of the senior citizens. The committee will give its report
not later than December this year.
40.
Government is fully committed to the social security and welfare of employees
serving in the organized sector. The Government is notifying minimum pension of ` 1,000
per month to all subscriber members of EP Scheme and has made an initial provision of `250
crore in the current financial year to meet the expenditure. Further, increase in mandatory
wage ceiling of subscription to EPS from ` 6,500 to ` 15,000 has been made and a provision
of ` 250 crore has been provided in the current budget. For the convenience of the
subscribers, EPFO will launch the “Uniform Account Number” Service for contributing
members to facilitate portability of Provident Fund accounts.
Empowerment of the Differently Abled Persons
41.
Government will make all out efforts to create a more inclusive society for Persons
with Disabilities to enable them to enjoy equal opportunities to lead an empowered life with
dignity. I propose to extend the scheme for Assistance to Disabled Persons for
purchase/fitting of Aids and Appliances (ADIP) to include contemporary aids and assistive
devices. It is also proposed to establish National level institutes for Universal Inclusive
Design and Mental Health Rehabilitation and also a Centre for Disability Sports.
Incentives for the Visually Challenged
42.
The Braille Presses in the Government and private sector are not able to meet the
demand of Braille Text books for the visually impaired students. It is proposed to provide
assistance to the State Governments to establish fifteen new Braille Presses and modernize
ten existing Braille Presses in the current financial year. Government will also print currency
notes with Braille like signs to assist the visibly challenged persons.
Women & Child Development
43.
Women’s safety is a concern shared by all the honourable members of this House. We
need to test out different approaches that can be validated and scaled up quickly. An outlay of
` 50 crores will be spent by Ministry of Road Transport & Highways on pilot testing a
scheme on “Safety for Women on Public Road Transport”. A sum of ` 150 crores will also
be spent by Ministry of Home Affairs on a scheme to increase the safety of women in large
cities. It is also proposed to set up “Crisis Management Centres” in all the districts of NCT of
Delhi this year in all government and private hospitals. The funding will be provided from the
Nirbhaya Fund.
Beti Bachao, Beti Padhao Yojana
44.
It is a shame that while the country has emerged as a major player amongst the
emerging market economies, the apathy towards girl child is still quite rampant in many parts
of the country. Therefore I propose to launch Beti Bachao, Beti Padhao Yojana which will be
a focused scheme which would help in generating awareness and also help in improving the
efficiency of delivery of welfare services meant for women. I propose to set aside a sum of
`100 crore for this.
Gender Mainstreaming
45.
Government would focus on campaigns to sensitize people of this country towards the
concerns of the girl child and women. The process of sensitization must begin early,
therefore, the school curriculum must have a separate chapter on gender mainstreaming.
Rural Development
Pradhan Mantri Gram Sadak Yojana
46.
Pradhan Mantri Gram Sadak Yojana initiated during the NDA-I under the stewardship
of Prime Minister Atal Behari Vajpayee has had a massive impact in improvement of access
for Rural population. It is time to reaffirm our commitment to a better and more energetic
PMGSY under the dynamic leadership of Prime Minister Shri Narendra Modi. I propose to
provide a sum of ` 14,389 crore.
MGNREGA
47.
The Government is committed to providing wage and self-employment opportunities
in rural areas. However, wage employment would be provided under MGNREGA through
works that are more productive, asset creating and substantially linked to agriculture and
allied activities.
National Livelihood Mission
48.
Ajeevika, the National Rural Livelihood Mission (NRLM), aims to eliminate rural
poverty through sustainable livelihood options. Under this mission, Women SHGs are
provided bank loans at 4% on prompt repayment in 150 districts and at 7% in all other
districts. I propose to extend the provision of bank loan for women SHGs at 4% in another
100 districts. I also propose to set up a “Start Up Village Entrepreneurship Programme” for
encouraging rural youth to take up local entrepreneurship programs. I am providing an initial
sum of ` 100 crore for this.
Rural Housing
49.
The Rural Housing Scheme has benefited a large percentage of rural population who
have availed credit through Rural Housing Fund (RHF). Accordingly, I propose to increase
the allocations for the year 2014-15 to ` 8,000 crore for National Housing Bank (NHB) with a
view to expand and continue to support Rural Housing in the country.
Watershed Development
50.
To give an added impetus to watershed development in the country, I propose to start
a new programme called “Neeranchal” with an initial outlay of ` 2,142 crores in the current
financial year.
Panchayati Raj
51.
Backward Region Grant Fund (BRGF) is being implemented in 272 backward
districts in 27 States, to fill up the critical gaps in development of basic infrastructure
facilities and for capacity building of Panchayats/ Gram Sabhas in backward areas. It is
proposed to restructure the BRGF to address intra-district inequalities to ensure that
backward sub-districts units within States receive adequate support.
Safe Drinking Water
52.
Many of our drinking water sources have excess impurities like flouride, arsenic and
manmade contaminations due to untreated sewage, industrial effluents and leaching of
pesticides and fertilizers. It is proposed to earmark ` 3,600 crore under National Rural
Drinking Water Programme for providing safe drinking water in approximately 20,000
habitations affected with arsenic, fluoride, heavy/ toxic elements, pesticides/ fertilizers
through community water purification plants in next 3 years.
Health and Family Welfare
53.
To move towards “Health for All”, the two key initiatives i.e. the Free Drug Service
and Free Diagnosis Service would be taken up on priority.
54.
In order to achieve universal access to early quality diagnosis and treatment to TB
patients, two National Institutes of Ageing will be set up at AIIMS, New Delhi and Madras
Medical College, Chennai. A national level research and referral Institute for higher dental
studies would be set up in one of the existing Dental institutions.
55.
It is a matter of great satisfaction that all the six new AIIMS at Jodhpur, Bhopal,
Patna, Rishikesh, Bhubaneswar and Raipur, which are part of Pradhan Mantri Swasthya
Suraksha Yojana, have become functional. A plan to set up four more AIIMS like institutions
at Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP is under
consideration. I propose to set aside a sum of ` 500 crore for this. Presently 58 government
medical colleges have been approved. It is also proposed to add 12 more government medical
colleges. In addition, dental facilities would also be provided in all the hospitals.
56.
For the first time, the Central Government will provide central assistance to
strengthen the States’ Drug Regulatory and Food Regulatory Systems by creating new drug
testing laboratories and strengthening the 31 existing State laboratories.
57.
In keeping with the Government’s focus on improving affordable healthcare and to
augment the transfer of technology for better health care facilities in rural India, fifteen
Model Rural Health Research shall be set up in the states, which shall take up research on
local health issues concerning rural population.
Education
School Education
58.
Elementary education is one of the major priorities of the Government. There is a
residual gap in providing minimal school infrastructure facilities. Government would strive to
provide toilets and drinking water in all the girls school in first phase. An amount of ` 28,635
crore is being funded for Sarva Shiksha Abhiyan and `4,966 crore for Rashtriya Madhyamik
Shiksha Abhiyan. A School Assessment Programme is being initiated at a cost of ` 30 crore.
To infuse new training tools and motivate teachers, “Pandit Madan Mohan Malviya New
Teachers Training Programme” is being launched. I am setting aside an initial sum of ` 500
crore for this.
59.
To take advantage of the reach of the IT, I propose to allocate a sum of `100 crore for
setting up virtual classrooms as Communication Linked Interface for Cultivating Knowledge
(CLICK) and online courses.
Higher Education
60.
The country needs a large number of Centres of higher learning which are world
class. I propose to set up Jai Prakash Narayan National Centre for Excellence in Humanities
in Madhya Pradesh. I also intend to set up five more IITs in the Jammu, Chattisgarh, Goa,
Andhra Pradesh and Kerala. Five IIMs would be set up in the States of Himachal Pradesh,
Punjab, Bihar, Odisha and Maharashtra. I propose to set aside a sum of ` 500 crore for this.
61.
Government also proposes to ease and simplify norms to facilitate education loans for
higher studies.
Digital India
62.
There is an imminent need to further bridge the divide between digital “haves” and
“have-nots”. For this it is proposed to launch a pan India programme “Digital India”. This
would ensure Broad band connectivity at village level, improved access to services through
IT enabled platforms, greater transparency in Government processes and increased
indigenous production of IT hardware and software for exports and improved domestic
availability. Special focus would be on supporting software product startups. A National
Rural Internet and Technology Mission for services in villages and schools, training in IT
skills and E-Kranti for government service delivery and governance scheme is also proposed.
I have provided a sum of ` 500 crore for this purpose.
63.
A programme for promoting “Good Governance” would be launched and I propose to
set aside a sum of ` 100 crore for this.
Information and Broadcasting
64.
So far around 400 permissions for setting up of a Community Radio Stations have
been issued. To encourage the growth in this sector, a new plan scheme is being taken up
with an allocation of ` 100 crore. This scheme would support about 600 new and existing
Community Radio Stations.
65.
Film & Television Institute, Pune and Satyajit Ray Film & Television Institute,
Kolkata are proposed to be accorded status of Institutes of national importance and a
“National Centre for Excellence in Animation, Gaming and Special Effects will be set up.
Urban Development
Urban Renewal
66.
It is time that our cities and towns undergo urban renewal and become better places to
live in. While developing housing and other infrastructure, both physical and economic,
which can have local variations, four fundamental activities must underpin such
development. These are provision of safe drinking water and sewerage management, use of
recycled water for growing organic fruits and vegetable, solid waste management and digital
connectivity. It is the vision of this Government that at least five hundred (500) such
habitations must be provided support, while harnessing private capital and expertise through
PPPs, to renew their infrastructure and services in the next ten years.
Pooled Municipal Debt Obligation Facility
67.
Pooled Municipal Debt Obligation Facility: This facility was set up in 2006 with
participation of several Banks to promote and finance infrastructure projects in Urban Area
on shared risk basis. Present corpus of this facility is `5,000 Crores. This Government has a
major focus of providing good infrastructure, including public transport, solid waste disposal,
sewerage treatment and drinking water in the urban areas. In keeping with the Hon’ble Prime
Minister’s vision for urban areas it is proposed to enlarge it to ` 50,000 Crores with extension
of the facility by five years to March 31, 2019.
Urban Transportation
68.
Urban Metro Projects have proven to be very useful in decongesting large cities. For
two million plus cities, planning of metro projects must begin now. Government will
encourage development of metro rail systems, including light rail systems, in the PPP mode,
which will be supported by the Central Government through VGF. In the current financial
year, I propose to set aside a sum of ` 100 crore for Metro Projects in Lucknow and
Ahemdabad.
Housing for All
69.
Our government is committed to endeavour to have housing for all by 2022. For this
purpose, I intend to extend additional tax incentive on home loans to encourage people,
especially the young, to own houses.
70.
I propose setting up a Mission on Low Cost Affordable Housing which will be
anchored in the National Housing Bank. Schemes will be evolved to incentivize the
development of low cost affordable housing. I propose to allocate this year also a sum of
`4,000 crores for NHB with a view to increase the flow of cheaper credit for affordable
housing to the urban poor/EWS/LIG segment. I have already outlined some other incentives
such as easier flow of FDI in this sector. Government is willing to examine other suggestions
that would spur growth in this sector.
71.
I also propose to add inclusion of slum development in the list of Corporate Social
Responsibility (CSR) activities to encourage the private sector to contribute more towards
this activity.
Malnutrition
72.
A national programme in Mission Mode is urgently required to halt the deteriorating
malnutrition situation in India, as present interventions are not adequate. A comprehensive
strategy including detailed methodology, costing, time lines and monitorable targets will be
put in place within six months.
Minorities
73.
A programme for the up gradation of skills and training in ancestral arts for
development for the minorities called “Up gradation of Traditional Skills in Arts, Resources
and Goods” would be launched to preserve the traditional arts and crafts which are rich
heritage.
74.
An additional amount of ` 100 crores for Modernization of Madarsas has been
provided to the Department of School Education.
III. AGRICULTURE
75.
Farming as an activity contributes nearly 1/6th to our National GDP and a major
portion of our population is dependent on it for livelihood. It has risen to the challenge of
making India largely self-sufficient in providing food for a growing population. To make
farming competitive and profitable, there is an urgent need to step up investment, both public
and private, in agro-technology development and creation and modernization of existing agribusiness infrastructure. Indian Agricultural Research Institute, Pusa has been at the forefront
of research in this area. However, since independence only one such centre has been
established. Government will establish two more such institutions of excellence on similar
pattern in Assam and Jharkhand with an initial sum of `100 crore in the current financial year.
In addition, an amount of ` 100 crores is being set aside for setting up an “Agri-Tech
Infrastructure Fund”.
76.
It is also proposed to establish Agriculture Universities in Andhra Pradesh and
Rajasthan and Horticulture Universities in Telangana and Haryana. An initial sum of ` 200
crores has been allocated for this purpose.
77.
Deteriorating soil health has been a cause of concern and leads to sub optimal
utilization of farming resources. Government will initiate a scheme to provide to every farmer
a soil health card in a Mission mode. I propose to set aside a sum of ` 100 crore for this
purpose and an additional ` 56 crores to set up 100 Mobile Soil Testing Laboratories across
the country. There have also been growing concerns about the imbalance in the utilization of
different types of fertilizers resulting in deterioration of the soil.
78.
Climate change is a reality which all of us have to face together. Agriculture as an
activity is most prone to the vagaries of climate change. To meet this challenge, I propose to
establish a “National Adaptation Fund” for climate change. As an initial sum an amount of
`100 crore will be transferred to the Fund.
79.
We are committed to sustaining a growth of 4% in Agriculture and for this we will
bring technology driven second green revolution with focus on higher productivity and
include “Protein revolution” as an area of major focus.
80.
As a very large number of landless farmers are unable to provide land title as
guarantee, institutional finance is denied to them and they become vulnerable to money
lenders’ usurious lending. I propose to provide finance to 5 lakh joint farming groups of
“Bhoomi Heen Kisan” through NABARD in the current financial year.
81.
Price volatility in the agriculture produce creates uncertainties and hardship for the
farmers. To mitigate this I am providing a sum of ` 500 crore for establishing a Price
Stabilization Fund.
82.
The farmers and consumers’ interest will be further served by increasing competition
and integrating markets across the country. To accelerate setting up of a National Market, the
Central Government will work closely with the State Governments to re-orient their
respective APMC Acts., to provide for establishment of private market yards/ private
markets. The state governments will also be encouraged to develop Farmers’ Markets in town
areas to enable the farmers to sell their produce directly.
83.
I also propose to set aside a sum of ` 50 crores for the development of indigenous
cattle breeds and an equal amount for starting a blue revolution in inland fisheries.
Agriculture Credit
84.
Banks are providing strong credit support to the agriculture sector. A target of ` 8 lakh
crore has been set for agriculture credit during 2014-15 which, I am confident, the banks will
surpass this.
Interest Subvention Scheme for Short Term Crop Loans
85.
Under the Interest Subvention Scheme for short term crop loans, the banks are
extending loans to farmers at a concessional rate of 7%. The farmers get a further incentive of
3% for timely repayment. I propose to continue the Scheme in 2014-15.
Rural Infrastructure Development Fund
86.
NABARD operates the Rural Infrastructure Development Fund (RIDF), out of the
priority sector lending shortfall of the banks, which helps in creation of infrastructure in
agriculture and rural sectors across the country. I propose to raise the corpus of RIDF by an
additional ` 5,000 crores from the target given in the Interim Budget to ` 25,000 crores in the
current financial year.
Warehouse Infrastructure Fund
87.
Increasing warehousing capacity for increasing the shelf life of agriculture produces
and thereby the earning capacity of the farmers is of utmost importance. Keeping in view the
urgent need for availability of scientific warehousing infrastructure in the country, I propose
an allocation of ` 5,000 crore for the fund for the year 2014-15.
Creation of Long Term Rural Credit Fund
88.
The share of long term investment credit in agriculture is going down as compared to
short term crop loan. This is severely hampering the asset creation in agriculture and allied
activities. In order to give a boost to long term investment credit in agriculture, I propose to
set up “Long Term Rural Credit Fund” in NABARD for the purpose of providing refinance
support to Cooperative Banks and Regional Rural Banks with an initial corpus of ` 5,000
crore.
Allocation of STCRC (Refinance) Fund
89.
The Short Term Cooperative Rural Credit (STCRC) – Refinance Fund was announced
in Union Budget 2008-09 with initial corpus of ` 5,000 crore. In order to ensure increased and
uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD,
I propose to allocate an amount of `50,000 crore for STCRC Fund during 2014-15.
Producers Development and Upliftment Corpus (PRODUCE)
90.
The issue of profitability of small holding based agriculture has assumed importance
in view of increasing proportion of small and marginal farmers in the country. I propose to
supplement NABARD’s Producers’ organization development fund for Producer’s
development and upliftment called PRODUCE with a sum of ` 200 crore which will be
utilized for building 2,000 producers organizations across the country over the next two
years.
Food Security
91.
Government is committed to reforms in the food sector. Restructuring FCI, reducing
transportation and distribution losses and efficacy of PDS would be taken up on priority.
92.
Government is also committed to provide wheat and rice at reasonable prices to the
weaker sections of the society. Even if due to inadequate rainfall there is a marginal decline
in agriculture production, stocks in the Central pool are adequate to meet any exigency.
Government shall, when required, undertake open market sales to keep prices under control.
Kisan TV
93.
Kisan TV, dedicated to the interests of the agriculture and allied sector will be
launched in the current financial year. This will disseminate real time information to the
farmers information regarding new farming techniques, water conservation, organic farming
etc. I propose to set aside a sum of ` 100 crore for this purpose.
IV. INDUSTRY
94.
The eBiz platform aims to create a business and investor friendly ecosystem in India
by making all business and investment related clearances and compliances available on a
24x7 single portal, with an integrated payment gateway. All Central Government
Departments and Ministries will integrate their services with the eBiz platform on priority by
31 December this year.
95.
A National Industrial Corridor Authority, with its headquarters in Pune, is being set
up to coordinate the development of the industrial corridors, with smart cities linked to
transport connectivity, which will be the cornerstone of the strategy to drive India’s growth in
manufacturing and urbanization. I have provided an initial corpus of ` 100 crore for this
purpose.
96.
The Amritsar Kolkata Industrial master planning will be completed expeditiously for
the establishment of industrial smart cities in seven States of India. The master planning of
three new smart cities in the Chennai-Bengaluru Industrial Corridor region, viz., Ponneri in
Tamil Nadu, Krishnapatnam in Andhra Pradesh and Tumkur in Karnataka will also be
completed.
97.
The perspective plan for the Bengaluru Mumbai Economic corridor (BMEC) and
Vizag-Chennai corridor would be completed with the provision for 20 new industrial clusters.
98.
Kakinada, its adjoining area and the port will be developed as the key drivers of
economic growth in the region with a special focus on hardware manufacturing.
99.
Exports cannot be exponentially increased unless the states play a very active role in
export promotion by providing good infrastructure and full facilitation. It will be our
endeavor to engage with the states to take India’s exports to a higher growth trajectory. It is
proposed to establish an Export promotion Mission to bring all stakeholders under one
umbrella.
Special Economic Zones
100. The Government is committed to revive the Special Economic Zones (SEZs) and
make them effective instruments of industrial production, economic growth, export
promotion and employment generation. For achieving this, effective steps would be
undertaken to operationalize the Special Economic Zones, to revive the investors’ interest to
develop better infrastructure and to effectively and efficiently use the available unutilized
land.
Apprenticeship
101. Comparing the size of the Indian economy, the performance of the Apprenticeship
Training Scheme is not satisfactory and a large number of training facilities in the industry
are unutilized. Apprenticeship Act will be suitably amended to make it more responsive to
industry and youth. We will also encourage MSMEs to avail of the benefits of this scheme.
Micro, Small and Medium Enterprises sector
102. SMEs form the backbone of our Economy. They account for a large portion of our
industrial output and employment. The bulk of service sector enterprises are also SMEs. Most
of these SMEs are Own Account Enterprises. Most importantly a majority of these
enterprises are owned or run by SCs, STs and OBCs. Financing to this sector is of critical
importance, particularly as it benefits the weakest sections. There is need to examine the
financial architecture for this sector. I propose to appoint a committee with representatives
from the Finance Ministry, Ministry of MSME, RBI to give concrete suggestions in three
months.
103. Promotion of entrepreneurship and start-up Companies remains a challenge. While
there have been some efforts to encourage, one principal limitation has been availability of
start-up capital by way of equity to be brought in by the promoters. In order to create a
conducive eco-system for the venture capital in the MSME sector it is proposed to establish a
` 10,000 crore fund to act as a catalyst to attract private Capital by way of providing equity,
quasi equity, soft loans and other risk capital for start-up companies.
104. To establish technology centre network to promote innovation, entrepreneurship and
agro-industry, I propose to set up a fund with a corpus of `200 crore.
105. The definition of MSME will be reviewed to provide for a higher capital ceiling. A
programme to facilitate forward and backward linkages with multiple value chain of
manufacturing and service delivery will also be put in place.
106. Entrepreneur friendly legal bankruptcy framework will also be developed for SMEs to
enable easy exit. A nationwide “District level Incubation and Accelerator Programme” would
be taken up for incubation of new ideas and providing necessary support for accelerating
entrepreneurship.
Textiles
107. I propose to set up a Trade Facilitation Centre and a Crafts Museum with an outlay of
` 50 crore to develop and promote handloom products and carry forward the rich tradition of
handlooms of Varanasi, where I also intend to support a Textile mega-cluster. I also propose
to set up six more Textile mega-clusters at Bareily, Lucknow, Surat, Kuttch, Bhagalpur,
Mysore and one in Tamil Nadu. I am allocating a sum of ` 200 crore for this purpose.
108. I also propose to set up a Hastkala Academy for the preservation, revival, and
documentation of the handloom/handicraft sector in PPP mode in Delhi. I have set aside a
sum of ` 30 crore for this purpose.
109. I propose to start a Pashmina Promotion Programme (P-3) and a programme for the
development of other crafts of Jammu & Kashmir. I am setting aside a sum of `50 crore for
this purpose.
V. INFRASTRUCTURE
110. India has emerged as the largest PPP market in the world with over 900 projects in
various stages of development. PPPs have delivered some of the iconic infrastructure like
airports, ports and highways which are seen as models for development globally. But we have
also seen the weaknesses of the PPP framework, the rigidities in contractual arrangements,
the need to develop more nuanced and sophisticated models of contracting and develop quick
dispute redressal mechanism. An institution to provide support to mainstreaming PPPs called
3P India will be set up with a corpus of `500 crores.
Shipping
111. A policy for encouraging the growth of Indian controlled tonnage will be formulated
to ensure increase in employment of the Indian seafarers. Development of ports is also
critical for boosting trade. Sixteen new port projects are proposed to be awarded this year
with a focus on port connectivity. ` 11,635 crore will be allocated for the development of
Outer Harbour Project in Tuticorin for phase I. SEZs will also be developed in Kandla and
JNPT. A comprehensive policy will also be announced to promote Indian ship building
industry in the current financial year.
Inland Navigation
112. Development of inland waterways can improve vastly the capacity for the
transportation of goods. A project on the river Ganga called ‘Jal Marg Vikas’ (National
Waterways-I) will be developed between Allahabad and Haldia to cover a distance of 1620
kms, which will enable commercial navigation of at least 1500 tonne vessels. The project will
be completed over a period of six years at an estimated cost of ` 4,200 crore.
New Airports
113. Despite increase in air connectivity air travel is still out of reach of a large number of
aspirational Indians. Scheme for development of new airports in Tier I and Tier II will be
launched for implementation through Airport Authority of India or PPPs.
Roads sector
114. Roads sector constitutes a very import artery of communication in the country. The
sector had taken shape from 1998-2004 under NDA-I. The sector again needs huge amount of
investment along with debottlenecking from maze of clearances. I propose investment in
National Highways Authority of India and State Roads of an amount of `37,880 crores, which
includes ` 3,000 crores for the North East. During CFY a target of NH construction of 8500
km will be achieved.
115. A modern nation needs multiple sources of transport. A country of the size of India
must have a transport network which can ensure faster travel across cities which are
geographically distant. This will also improve the supply chain in transporting goods across
cities. We will initiate work on select expressways in parallel to the development of the
Industrial Corridors. For project preparation NHAI shall set aside a sum of ` 500 crore.
Power
116. To promote cleaner and more efficient thermal power, I propose to allocate an initial
sum of ` 100 crore for preparatory work for a new scheme “Ultra-Modern Super Critical Coal
Based Thermal Power Technology.”
Coal
117. Comprehensive measures for enhancing domestic coal production are being put in
place along with stringent mechanism for quality control and environmental protection,
which includes supply of crushed coal and setting up of washeries. The existing impasse in
the coal sector will be resolved and adequate quantity of coal will be provided to power
plants which are already commissioned or would be commissioned by March 2015, to unlock
dead investments. An exercise to rationalize coal linkages which will optimize transport of
coal and reduce cost of power is underway.
New & Renewable Energy
118. New and Renewable energy deserves a very high priority. It is proposed to take up
Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, and Laddakh in J&K. I
have set aside a sum of ` 500 crores for this. We are launching a scheme for solar power
driven agricultural pump sets and water pumping stations for energizing one lakh pumps. I
propose to allocate a sum of ` 400 crores for this purpose. An additional ` 100 crore is set
aside for the development of 1 MW Solar Parks on the banks of canals. Implementation of
the Green Energy Corridor Project will be accelerated in this financial year to facilitate
evacuation of renewable energy across the country.
Petroleum & Natural Gas
119. It is my Government’s intention to accelerate production and exploitation of Coal Bed
Methane reserves. The possibility of using modern technology to revive old or closed wells
will also be explored to maximize production from such fields.
120. The usage of PNG will be rapidly scaled up in a Mission mode as it is “clean” and
efficient to deliver.
121. We have at present about 15,000 km of gas pipeline systems in the country. In order
to complete the gas grid across the country, an additional 15,000 km of pipelines are required.
It is proposed to develop these pipelines using appropriate PPP models. This will help
increase the usage of gas, domestic as well as imported, which, in the long-term will be
beneficial in reducing dependence on any one energy sources.
Mining
122. It is my Government’s intention to encourage investment in mining sector and
promote sustainable mining practices to adequately meet the requirements of industry without
sacrificing environmental concerns. The current impasse in mining sector, including, iron ore
mining, will be resolved expeditiously. Changes, if necessary, in the MMDR Act, 1957
would be introduced to facilitate this.
Revision of Royalty Rate
123. There have been requests from several State Governments to revise rate of Royalty on
minerals. Hon’ble Members are aware that rate of Royalty can be revised after a period of
three years. Last revision took place in August, 2009. Therefore, another revision, which is
due, will be undertaken to ensure greater revenue to the State Governments.
VI. FINANCIAL SECTOR
Capital Market
124. Financial sector is at the heart of the growth engine. Globalization helps channelize
external savings to India to bridge the resource gap but also renders the financial sector
vulnerable to the vagaries of the global economy. We have seen this in the recent past in
ample measure. It is essential to strengthen and modernize the legislative regulatory
framework. There are some important recommendations of the Financial Sector Legislative
Reforms Commission like the enactment of the Indian Financial Code which is considered
necessary for better governance and accountability. It will be my endeavor to complete the
ongoing process of consultations with all the stakeholders expeditiously on this. It is also
essential to have a modern monetary policy framework to meet the challenge of an
increasingly complex economy. Government will, in close consultation with the RBI, put in
place such a framework.
125. While the impact of the above measures will be felt in the medium term, towards the
same objective, I propose to:
i.
Advise financial sector regulators to take early steps for a vibrant, deep and
liquid corporate bond market and deepen the currency derivatives market by
eliminating unnecessary restrictions.
ii.
Extend a liberalized facility of 5% withholding tax to all bonds issued by Indian
corporate abroad for all sectors and extend the validity of the scheme to
30.06.2017.
iii. Liberalize the ADR/GDR regime to allow issuance of depository receipts on all
permissible securities.
iv. Allow international settlement of Indian debt securities.
v.
Completely revamp the Indian Depository Receipt (IDR) and introduce a much
more liberal and ambitious Bharat Depository Receipt (BhDR).
vi. Clarify the tax treatment on income of foreign fund whose fund managers are
located in India to resolve a long-standing problem. Details will be presented in
Part B.
126. The Indian capital markets have been a source of risk capital for a growing India. I
propose to take a number of measures to further energize these markets including:
i.
Introduction of uniform KYC norms and inter-usability of the KYC records
across the entire financial sector.
ii.
Introduce one single operating demat account so that Indian financial sector
consumers can access and transact all financial assets through this one account.
127. As part of strengthening the regulatory framework for commodity markets, the
Warehouse Development and Regulatory Authority (WD&RA) has begun a transformation
plan to invigorate the warehousing sector and significantly improve post-harvest lending to
farmers against negotiable warehouse receipts. This plan will be implemented with vigor.
128. There is an urgent need to converge the current Indian accounting standards with the
International Financial Reporting Standards (IFRS). I propose for adoption of the new Indian
Accounting Standards (Ind AS) by the Indian companies from the financial year 2015-16
voluntarily and from the financial year 2016-17 on a mandatory basis. Based on the
international consensus, the regulators will separately notify the date of implementation of
AS Ind for the Banks, Insurance companies etc. Standards for the computation of tax would
be notified separately.
Banking
129. There have been some suggestions for consolidation of Public Sector Banks.
Government, in principle, agrees to consider these suggestions.
130. To provide all households in the country with banking services, a time bound
programme would be launched as Financial Inclusion Mission on 15 August this year. It
would particularly focus to empower the weaker sections of the society, including women,
small and marginal farmers and labourers. Two bank accounts in each household are
proposed to be opened which will also be eligible for credit.
131. Long term financing for infrastructure has been a major constraint in encouraging
larger private sector participation in this sector. On the asset side, banks will be encouraged
to extend long term loans to infrastructure sector with flexible structuring to absorb potential
adverse contingencies, sometimes known as the 5/25 structure. On the liability side, banks
will be permitted to raise long term funds for lending to infrastructure sector with minimum
regulatory pre-emption such as CRR, SLR and Priority Sector Lending (PSL).
132. After making suitable changes to current framework, a structure will be put in place
for continuous authorization of universal banks in the private sector in the current financial
year. RBI will create a framework for licensing small banks and other differentiated banks.
Differentiated banks serving niche interests, local area banks, payment banks etc. are
contemplated to meet credit and remittance needs of small businesses, unorganized sector,
low income households, farmers and migrant work force.
133. The rising Non Performing Assets of Public Sector Banks is a matter of concern for
the Government. Six new Debt Recovery Tribunals would be set up at Chandigarh,
Bengaluru, Ernakulum, Dehradun, Siliguri and Hyderabad. Government will work out
effective means for revival of other stressed assets.
Insurance Sector
134. Benefits of insurance in India have not reached a large section of the people and
insurance penetration and density are very low. The Government would work towards
addressing this situation in multi-pronged manner with the support of all stake holders
concerned. This would include suitable incentives, using banking correspondents,
strengthening micro-offices opened by public sector insurance. It is also proposed to take up
the pending insurance laws (amendment) Bill for consideration of the Parliament.
135. As part of the legislative initiatives under financial sector reforms, it is proposed to
bridge the regulatory gap under the Prize Chits and Money Circulation Scheme (Banning)
Act, 1978. This step is expected to facilitate effective regulation of companies and entities
which have duped a large number of poor and vulnerable people in this country.
Small Savings
136. To address the concerns of decline in savings rate and improving returns for small
savers, I propose to revitalize small savings.
137. My Government attaches utmost importance to the welfare of Girl Child. A special
small savings instrument to cater to the requirements of educating and marriage of the Girl
Child will be introduced. A National Savings Certificate with insurance cover will also be
launched to provide additional benefits for the small saver.
138. In the PPF Scheme, annual ceiling will be enhanced to `1.5 lakh p.a. from ` 1 lakh at
present.
VII. DEFENCE & INTERNAL SECURITY
139. There can be no compromise with the defence of our country. I therefore propose to
allocate an amount of ` 2,29,000 crore for the current financial year for Defence.
One Rank One Pension
140. We reaffirm our commitment to our brave soldiers. A policy of “One Rank One
Pension” has been adopted by the Government to address the pension disparities. We propose
to set aside a further sum of ` 1,000 crore to meet this year’s requirement.
Modernization
141. Modernization of the armed forces is critical to enable them to play their role
effectively in the Defence of India’s strategic interests. I, therefore, propose to increase the
capital outlay for Defence by ` 5,000 crore over the amount provided for in the interim
Budget. This includes a sum of ` 1,000 crore for accelerating the development of the Railway
system in the border areas. Urgent steps would also be taken to streamline the procurement
process to make it speedy and more efficient.
War Memorial
142. The country is deeply indebted to the officers and the jawans of the armed forces for
having made huge sacrifices to defend its honour. In doing so a very large number of them
gave up their lives. It is a privilege for the nation to erect a befitting memorial in their
memory. I am happy to announce that a War Memorial will be constructed in the Princes
Park. It will be supplemented by a War Museum. I am allocating a sum of ` 100 crore for this
purpose.
The Defence Production
143. In the year 2011 a separate fund was announced to provide necessary resources to
public and private sector companies, including SMEs, as well as academic and scientific
institutions to support research and development of Defence systems that enhance cuttingedge technology capability in the country. However, beyond the announcement, no action
was taken. Therefore, I propose to set aside an initial sum of ` 100 crore to set up a
Technology Development Fund to support this objective.
Internal Security
144. The scheme for modernization of state police forces would be reviewed. I propose to
enhance the allocation from a sum of ` 1,847 crore in the BE of 2013-14 to ` 3,000 crore in the
current financial year. I am also allocating adequate funds for carrying out small but much
needed developmental activities as Additional Central Assistance for Left Wing Extremist
Affected districts.
145.
In order to strengthen and modernize border infrastructure, a sum of `2,250 crore has
been set aside. In addition, a sum of ` 990 crore has been allocated for the socio economic
development of the villages along the borders. A sum of `150 crore has also been ear-marked
for the construction of Marine Police Station, Jetties, for the purchase of boats etc.
National Police Memorial
146. The nation is equally indebted to the officers and the jawans of the Police forces,
including the central armed police forces, who are constantly engaging with the enemy within
and in the process sacrificing their lives in the line of duty. I announce the construction of a
befitting National Police Memorial. I propose to set aside a sum of ` 50 crores for this
purpose in the current financial year.
VIII. CULTURE & TOURISM
147. India’s rich cultural, historical, religious and natural heritage provides a huge
potential for the development of tourism and job creation as an Industry. I propose to create 5
tourist circuits around specific themes and set aside a sum of ` 500 crore for this purpose.
148. National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive
(PRASAD) shall be launched in this financial year. A sum of ` 100 crore is being set aside for
this purpose.
149. National Heritage City Development and Augmentation Yojana (HRIDAY) will also
be launched for conserving and preserving the heritage characters of these cities. To begin
with I propose to launch this programme in the cities such as Mathura, Amritsar, Gaya,
Kanchipuram, Vellankani and Ajmer. I propose to set aside a sum of ` 200 crore for this
purpose. The Project will work through a partnership of Government, academic institutions
and local community combining affordable technologies.
150. Archeological sites preservation requires urgent attention lest our ancient heritage is
lost to all future generations. For this purpose, I intend to set aside a sum of ` 100 crore.
151. Sarnath-Gaya-Varanasi Buddhist circuit would also be developed with world class
tourist amenities to attract tourists from all over the world.
152. Goa has emerged as a major international convention centre. It has also been declared
as the permanent venue for International Film Festival of India. There is an urgent need to
develop world class convention facilities. This can best be done in close collaboration with
the private sector. Government of India will fully support this initiative to develop the
facilities in PPP mode through the VGF scheme.
Water Resources and cleaning of Ganga
Linking of Rivers
153. Rivers form the lifeline of our country. They provide water not only for producing
food for the multitudes but also drinking water. Unfortunately the country is not uniformly
blessed with perennial rivers. Therefore, an effort to link the rivers can give rich dividends to
the country. It is time that we made a serious effort to move in this direction. To expedite the
preparation of the Detailed Project Reports, I propose to set aside a sum of ` 100 crore.
Sacred Rivers
154. Substantial amount of money has been spent in the conservation and improvement of
the Ganga, which has a very special sacred place in the collective consciousness of this
country. However, the efforts have not yielded desired results because of the lack of
concerted effort by all the stakeholders. I propose to set up Integrated Ganga Conservation
Mission called “Namami Gange” and set aside a sum of ` 2,037 crores for this purpose.
Development of Ghats and beautification of Riverfront
155. Our Riverfronts and Ghats are not only places of rich historical heritage but many of
these are also sacred. To start this process in the country, I propose to set aside a sum of ` 100
crore for Ghat development and beautification of river front at Kedarnath, Haridwar, Kanpur,
Varanasi, Allahabad, Patna and Delhi in the current financial year.
NRI Ganga Fund
156. NRIs have been a very important contributor to the development process in India, in
areas such as education, health and preservation of culture. In this context, to harness their
enthusiasm to contribute towards the conservation of the river Ganga, NRI Fund for Ganga
will be set up which will finance special projects.
Science and Technology
Technology Research Centres
157. The Department of Science & Technology has some of country’s leading research
centres in the areas such as nanotechnology, materials science and bio-medical device
technology. The government will strengthen at least five such institutions as Technical
Research Centres to make them more effective in the innovation space through Public Private
Partnerships.
Stimulating Investment In Biotechnology
158. The development of biotech clusters in Faridabad and Bengaluru will be scaled up
and taken to the highest international quality. This effort will include global partnerships in
accessing model- organism resources for disease biology, stem cell biology and for high-end
electron microscopy.
159. The nascent agri-biotech cluster in Mohali will be scaled up to include plant-genetic
and phenotype platforms. Secondary agriculture will be a major thrust in Mohali through
collaborations in the public and private sector. In addition, two new clusters, in Pune and
Kolkata will be established.
160. Global partnerships will be developed under India’s leadership to transform the Delhi
component of the International Centre for Genetic Engineering and Biotechnology (ICGEB)
into a world-leader in life sciences and biotechnology.
Indian Space Programme
161. Several major space missions are planned for 2014-15 which include the experimental
flight of India’s future heavy capacity launcher GSLV Mk-III, one commercial launch of
PSLV and two more navigational satellites.
162. Our Mars Orbiter spacecraft is in its 300 days long voyage to Planet Mars along the
designated helio-centric trajectory. Mars Orbiter Spacecraft is expected to be orbiting around
Mars on September 24, 2014.
Sports and Youth Affairs
Sports
163. Sports are an integral part of growing up and personality development. Unfortunately,
in our country, sports have not been main-streamed to date. Government will set up national
level Sports Academies for major games in different parts of the country to mainstream
sports.Academies with international level facilities for training of accomplished athletes and
for nurturing best talent in the country at junior and sub-junior level will also be set up for
Shooting, Archery, Boxing, Wrestling, Weightlifting and various Track and field events.
164. Jammu & Kashmir has a lot of sporting talent which is not finding expression due to
inadequate sports facilities. I propose to provide a sum of `200 crore for upgrading the indoor
and outdoor sports stadiums to international standards in Jammu and in Kashmir Valley.
165. I also propose to set up a sports university in Manipur. For this I am providing a sum
of ` 100 crore in the current financial year.
166. Unique sports traditions have developed in the Himalayan region in the countries and
the states that are a part of it. To promote these, India will start an annual event to promote
these games and would invite countries such as Nepal and Bhutan also to participate in
addition to the Indian states such as J&K, Uttarakhand, Himachal Pradesh, Sikkim and the
North Eastern States.
167. I also propose to set aside a sum of ` 100 crore for the training of our sports women
and men for the forthcoming Asian and Commonwealth games.
Youth
168. Employment exchanges will be transformed into career centres and in addition for
providing information about job availability. These centers will also extend counseling
facilities to the youth for selecting the jobs best suited to their ability and aptitude. I have set
aside a sum of ` 100 crore for this purpose.
169. Youth of India are pragmatic and forward looking and wish to be leaders in all fields.
In order to promote leadership skills, I propose to set up “A Young Leaders Programme” with
an initial allocation of ` 100 crore.
IX. OTHER PROPOSALS
Displaced Kashmiri Migrants
170. Displaced Kashmiri migrants require our special support for rehabilitation. For this, I
intend to provide a sum of ` 500 crore in the current financial year.
Conservation of Himalayas
171. There is a great need to increase the capacity in the country for Himalayan Studies. I
propose to set up a National Centre for Himalayan Studies in Uttarakhand with an initial
outlay of ` 100 crore.
Academy for Customs
172. It is proposed to set up the National Academy for Customs & Excise at Hindupur in
Andhra Pradesh.
North Eastern States
Organic Food
173. North Eastern Region of India has tremendous potential for development of organic
farming. With a growing global demand for organic food, people living in the NE states can
reap rich harvest from development of commercial organic farming. To facilitate this, I
propose to provide a sum of ` 100 crore for this purpose in the current financial year.
North East Railway Connectivity
174. North Eastern Region has suffered from under development and a sense of isolation
due to lack of proper connectivity. Development of rail system is urgently required to bridge
this gap. I intend to expedite the development of rail connectivity in the region and for this
purpose I propose to set aside an additional sum of ` 1,000 crore over and above the amount
provided for in the interim Budget.
24x7 Channel for the North East
175. TV is a very powerful tool for the expression of cultural identities and for creating
greater awareness of the richness of the diversity of our country. To provide a strong platform
to rich cultural and linguistic identity of the North-East, a new 24x7 channel called “Arun
Prabha” will be launched.
Andhra Pradesh and Telangana
176. My Government is committed to addressing the issues relating to development of
Andhra Pradesh and Telangana in the AP Re-organization Act, 2014. Provision has been
made by various Ministries/Departments to fulfill the obligation of Union Government for
both the States.
National Capital Territory of Delhi
177. NCT of Delhi faces large in-migration every year. Delhi is plagued by frequent
transmission related problems and issues of water distribution and supply. In order to
overcome this and make Delhi a world class city, I propose to provide ` 200 crore for power
reforms and ` 500 crore for water reforms.
178. In addition, to solve the long term water supply issues to the capital region,
construction of long pending Renuka Dam would be taken up on priority. I have provided an
initial sum of ` 50 crore for this.
Andaman and Nicobar Island and Puducherry
179. Andaman and Nicobar Island are part of our rich cultural heritage. In order to tide
over communication related problems of the Island, I propose to allot a sum of ` 150 crore.
180. Similarly, I propose to provide ` 188 crore to Puducherry for meeting commitments
for Disaster preparedness.
X. BUDGET ESTIMATES
181. I now turn to the Budget estimates for Main Budget 2014-15. We have inherited a
legacy, wherein, continuance of fiscal consolidation cannot be compromised while providing
for the essential items. However, we have mandate to fulfill for the people. Keeping this in
mind we have prepared the estimates of expenditure and receipts for Financial Year 2014-15.
182. Non-Plan expenditure estimates for the Financial Year are ` 12,19,892 crore. While
preparing Non-Plan estimates due care has been taken to fully provide for all the essential
activities. Additional amounts have been provided for fertilizer subsidy and capital
expenditure of Armed Forces.
183. While preparing estimates of plan expenditure, attention was paid to the absorptive
capacity of the Department and on achieving greater outcome with the same financial outlay.
In 2013-14, plan funds to the tune of ` 4,53,085 crore could be utilised. Plan allocation of
`5,75,000 crore in the Main Budget 2014-15 mark an increase of 26.9% over actuals for
2013-14 and have been targeted towards Agriculture, capacity creation in Health and
Education, Rural Roads and National Highways Infrastructure, Railways network expansion,
clean energy initiatives, development of water resources and river conservation plans. Further
thorough convergence of programmes greater impact from the money spent will be achieved.
184.
Total expenditure estimates thus stands at ` 17,94,892 crore.
185.
To finance this expenditure, it is estimated that Gross Tax receipts will be ` 13,64,524
crore. After devolving the share of states, share of centre will be ` 9,77,258 crore. Non Tax
Revenues for the current Financial Year will be `2,12,505 crore and capital receipts other than
borrowings will be ` 73,952 crore.
186. With the above estimates, fiscal deficit will be 4.1% of GDP and Revenue deficit will
be 2.9 per cent of GDP.
187. Hon’ble Members will recall that it was the initiative of the previous NDA
Government under Shri Atal Bihari Vajpayee, which had made compulsory 10% allocation of
plan funds for North Eastern Region and had made them Non-lapsable in nature. From the
current Budget, we have introduced a Statement which will separately show plan allocation
made for North Eastern Region. In Financial Year 2014-15, an allocation of ` 53,706 crore
has been made for North Eastern Region. We have further made an allocation of ` 98,030
crore for women and `81,075 crore for child welfare.
PART B
XI. TAX PROPOSALS
188.
Madam Speaker, I shall now present my tax proposals.
189. Taxes are important for every economy to fund Government expenditure on security
and welfare of its people. In the interim Budget 2014-15, my predecessor had set revenue
collection targets for direct taxes as well as indirect taxes, which appear to be ambitious. I
propose to retain these targets and it shall be my endeavour to achieve the same. The impact
of the tax changes now proposed have of course been factored into the Budget Estimates,
2014-15.
190. While preparing the tax proposals, I had to encounter the challenge of an extremely
limited fiscal space. Nonetheless, I propose to introduce measures to revive the economy,
promote investment in manufacturing sector and rationalize tax provisions so as to reduce
litigation as well as to address the problem of inverted duty structure in certain areas. I also
propose to give relief to individual taxpayers and to certain sectors of the economy.
Direct Taxes
191.
Let me begin with direct taxes.
192. Madam Speaker, I do not propose to make any change in the tax rate. However, with
a view to provide relief to small and marginal taxpayers and senior citizens, I propose to
increase personal income tax exemption limit by `50,000 that is, from ` 2 lakh to ` 2.5 lakh in
the case of individual taxpayers who are below the age of 60 years. Similarly, I also propose
to raise the exemption limit from ` 2.5 lakh to ` 3 lakh in the case of senior citizens.
193. I do not propose to make any change in the rate of surcharge either for the corporates
or the individuals, HUFs, firms etc.
194.
The education cess for all taxpayers shall continue at 3 percent.
195. In the year 2012-13 the gross domestic savings were 30.1% of the GDP as compared
to 33.7% in the year 2009-10. Increase in savings and their productive use leads to higher
economic growth. The households are the main contributors to savings. Therefore, to
encourage domestic investment in long term savings, I propose to increase the investment
limit under section 80C of the Income-tax Act from ` 1 lakh to ` 1.5 lakh.
196. Housing continues to be an area of concern for middle and lower middle class due to
high cost of financing. Therefore, to reduce this burden, I propose to increase the deduction
limit on account of interest on loan in respect of self occupied house property from ` 1.5 lakh
to ` 2 lakh.
197. Infrastructure and construction sectors have a significant role in the economy.
Growth in these sectors is necessary to revive the economy and generate jobs for millions of
our young boys and girls. As stated earlier and with a view to attract large scale investment in
these sectors, I have provided a conducive tax regime for Infrastructure Investment Trusts
and Real Estate Investment Trusts to be set up in accordance with regulations of the
Securities and Exchange Board of India.
198. The manufacturing sector is of paramount importance for the growth of our economy.
This sector has multiplier effect on creation of jobs. Last year, an incentive in the form of
investment allowance to a manufacturing company that invests more than ` 100 crore in plant
and machinery during the period from 01.04.2013 to 31.03.2015 was announced.
Considering the need to incentivize smaller entrepreneurs, I propose to provide investment
allowance at the rate of 15 percent to a manufacturing company that invests more than ` 25
crore in any year in new plant and machinery. This benefit will be available for three years
i.e. for investments upto 31.03.2017. The Scheme announced last year will continue to
operate in parallel till 31.03.2015.
199. I also propose to extend the investment linked deduction to two new sectors, namely,
slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication
manufacturing units. This will boost investment in these two critical sectors.
200. Supply of power continues to be a major area of concern for the country. Therefore,
instead of annual extensions, I propose to extend the 10 year tax holiday to the undertakings
which begin generation, distribution and transmission of power by 31.03.2017. This stability
in our policy will help the investors to plan their investments better.
201. Foreign Portfolio Investors (FPIs) have invested more than ` 8 lakh crore (about 130
billion US $) in India. One of their concerns is uncertainty in taxation on account of
characterization of their income. Moreover, the fund managers of these foreign investors
remain outside India under the apprehension that their presence in India may have adverse tax
consequences. With a view to put an end to this uncertainty and to encourage these fund
managers to shift to India, I propose to provide that income arising to foreign portfolio
investors from transaction in securities will be treated as capital gains.
202. The concessional rate of tax at 15 percent on dividends received by Indian companies
from their foreign subsidiaries has resulted in enhanced repatriation of funds from abroad. I
propose to continue with this concessional rate of 15 percent on foreign dividends without
any sunset date. This will ensure stability of taxation policy.
203. In order to augment low cost long term foreign borrowings for Indian companies, I
propose to extend the eligible date of borrowing in foreign currency from 30.06.2016 to
30.06.2017 for a concessional tax rate of 5 percent on interest payments. I also propose to
extend this tax incentive to all types of bonds instead of only infrastructure bonds. I hope this
measure will enable the companies to step up their investments in India.
204. In order to reduce litigation on transfer pricing issues, I propose to make certain
changes in Transfer Pricing regulations.
(1) An Advance Pricing Agreement (APA) scheme was introduced in the year 2012.
It has received good response. I propose to strengthen the administrative set up of
APA to expedite disposal of applications. Further, I propose to introduce a “Roll
Back” provision in the APA scheme so that an APA entered into for future
transactions may also be applied to international transactions undertaken in
previous four years in specified circumstances.
(2) In order to align Transfer Pricing regulations in India with the best available
practices, I propose to introduce range concept for determination of arm’s length
price. However, the arithmetic mean concept will continue to apply where
number of comparable is inadequate. The relevant data is under analysis and
appropriate rules will be prescribed.
(3) As per existing provisions of Transfer Pricing Regulations, only one year data is
allowed to be used for comparable analysis with some exception. I propose to
amend the regulations to allow use of multiple year data.
Necessary legislative amendments to give effect to the above proposals including
those relating to the Authority for Advance Rulings and Income-tax Settlement Commission
will be moved in the current session of the Parliament.
205. In the case of Mutual Funds, other than equity oriented funds, the capital gains arising
on transfer of units held for more than a year is taxed at a concessional rate of 10% whereas
direct investments in banks and other debt instruments attract a higher rate of tax. This
allows tax arbitrage opportunity. This arbitrage has hardly benefitted retail investors as their
percentage is very small among such Mutual Fund investors. With a view to remove this tax
arbitrage, I propose to increase the rate of tax on long term capital gains from 10 percent to
20 percent on transfer of units of such funds. I also propose to increase the period of holding
in respect of such units from 12 months to 36 months for this purpose.
206. In the year 2003, the tax liability on income by way of dividends was shifted from the
shareholder to the company. The shareholder was required to pay tax on the gross dividends,
but now the company pays tax on the dividend amount net of taxes. Similarly, in the case of
Mutual Fund, income distribution tax is paid on the income distributed net of taxes. I
propose to remove this anomaly both in the case of the company and the Mutual Fund.
207. Currently, where an assessee fails to deduct and pay tax on specified payments to
residents, 100 percent of such payments are not allowed as deduction while computing his
income. This has caused undue hardship to taxpayers, particularly where the rate of tax is
only 1 to 10%. Hence, I propose to provide that instead of 100 percent, only 30% of such
payments will be disallowed.
208. The Direct Taxes Code Bill, 2010 has lapsed with the dissolution of the 15th Lok
Sabha. Having considered the report of the Standing Committee on Finance and the views
expressed by the stakeholders, my predecessor had placed a revised Code in the public
domain in March, 2014. The Government shall consider the comments received from the
stakeholders on the revised Code. The Government will also review the DTC in its present
shape and take a view in the whole matter.
209. Income-tax Department is expected to function not only as an enforcement agency but
also as a facilitator. A number of Aykar Seva Kendras (ASK) have been opened in different
parts of the country. I propose to extend this facility by opening 60 more such Seva Kendras
during the current financial year to promote excellence in service delivery.
210. The focus of any tax administration is to broaden the tax base. Our policy thrust is to
adopt non intrusive methods to achieve this objective. In this direction, I propose to make
greater use of information technology techniques.
211.
Net Effect of the direct tax proposals is revenue loss of ` 22,200 crore.
Indirect Taxes
212.
I now turn to indirect taxes and shall begin with customs duties.
213. Manufacturing sector is under stress due to a variety of reasons. To boost domestic
manufacture as also to address the issue of inverted duties, I propose to reduce the basic
customs duty (BCD) on:

Fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial
grade crude oils from 7.5 percent to Nil for manufacture of soaps and oleochemicals;

Crude glycerin from 12.5 percent to 7.5 percent and crude glycerin used in the
manufacture of soaps from 12.5 percent to Nil;

Steel grade limestone and steel grade dolomite from 5 percent to 2.5 percent;

Battery waste and battery scrap from 10 percent to 5 percent;

Coal tar pitch from 10 percent to 5 percent;

Specified inputs for manufacture of spandex yarn from 5 percent to Nil.
214. In order to encourage new investment and capacity addition in the chemicals and
petrochemicals sector, I propose to reduce the basic customs duty on reformate from 10
percent to 2.5 percent; on ethane, propane, ethylene, propylene, butadiene and ortho-xylene
from 5 percent to 2.5 percent; on methyl alcohol and denatured ethyl alcohol from 7.5 percent
to 5 percent; and on crude naphthalene from 10 percent to 5 percent.
215. The demand for electronics is growing very fast. To boost domestic production and
reduce our dependence on imports, I intend to take the following steps:

Impose basic customs duty at 10 percent on specified telecommunication
products that are outside the purview of the Information Technology Agreement;

Exempt all inputs/components used in the manufacture of personal computers
from 4 percent special additional duty (SAD);

Impose education cess on imported electronic products to provide parity between
domestically produced goods and imported goods;

Exempt 4 percent SAD on PVC sheet and ribbon used for the manufacture of
smart cards.
216. Cathode ray TVs are used by weaker sections who cannot afford to buy more
expensive flat panel TVs. I propose to exempt colour picture tubes from basic customs duty
to make cathode ray TVs cheaper. The duty concession will help revive manufacturing of
TVs in the SME sector and create employment opportunities. At the same time, to encourage
production of LCD and LED TVs below 19 inches in India, I propose to reduce the basic
customs duty on LCD and LED TV panels of below 19 inches from 10 percent to Nil.
Further, to encourage manufacture of LCD and LED TV panels, I propose to exempt from
basic customs duty specified inputs used in their manufacture.
217. The domestic stainless steel industry is presently suffering from severe underutilization of capacity. To give an impetus to the stainless steel industry, I propose to increase
the basic customs duty on imported flat-rolled products of stainless steel from 5 percent to 7.5
percent.
218. We need to maximize our utilization of solar power. The existing duty structure
incentivizes imports rather than domestic manufacture of solar photovoltaic cells and
modules. Therefore, I propose to exempt from basic customs duty:

specified inputs for use in the manufacture of EVA sheets and back sheets;

flat copper wire for the manufacture of PV ribbons.
A concessional basic customs duty of 5 percent is also being extended to machinery
and equipment required for setting up of a project for solar energy production.
219. To promote wind energy, I propose to reduce the basic customs duty from 10 percent
to 5 percent on forged steel rings used in the manufacture of bearings of wind operated
electricity generators. Also, I propose to exempt the SAD of 4 percent on parts and raw
materials required for the manufacture of wind operated generators. Further, I propose to
prescribe a concessional basic customs duty of 5 percent on machinery and equipment
required for setting up of compressed biogas plants (Bio-CNG).
220. I have only highlighted some of the proposals in the Budget 2014-15. I am sure these
measures would incentivize value addition, generate income and create more jobs in India.
221. I have also undertaken several tax rationalization measures. At present, coal attracts
customs duties at different rates. I propose to rationalize the duty structure on all non-
agglomerated coal at 2.5 percent basic customs duty and 2 percent CVD. Henceforth,
anthracite coal, bituminous coal, coking coal, steam coal and other coal will attract the same
duty. This will eliminate all assessment disputes and transaction costs associated with testing
of various parameters of coal.
222. Metallurgical coke is manufactured out of coking coal. The basic customs duty on
metallurgical coke is being increased from Nil to 2.5 percent in line with the duty on coking
coal.
223. Ships imported for breaking up attract basic customs duty at 5 percent. As against
this, melting scrap of iron or steel attracts basic customs duty at 2.5 percent. I propose to
rationalize the duty on ship breaking scrap and melting scrap of iron or steel by reducing the
basic customs duty on ships imported for breaking up from 5 percent to 2.5 percent.
224. Semi-processed, half cut or broken diamonds are presently exempt from basic
customs duty. As against this, cut and polished diamonds and coloured gemstones attract
basic customs duty of 2 percent. To prevent mis-use and avoid assessment disputes, the basic
customs duty on semi-processed, half cut or broken diamonds, cut and polished diamonds
and coloured gemstones is being rationalized at 2.5 percent. To encourage exports, pre-forms
of precious and semi-precious stones are being fully exempted from basic customs duty.
225. To encourage exports of readymade garments I propose to increase the duty free
entitlement for import of trimmings, embellishments and other specified items from 3 percent
to 5 percent of the value of their exports.
226. Considering the need to conserve our natural resources, I propose to increase the
export duty on bauxite from 10 percent to 20 percent.
227. The free baggage allowance under the baggage rules was last revised in 2012. As a
measure of passenger facilitation, I propose to increase the free baggage allowance from
`35,000 to ` 45,000.
228.
I shall now deal with excise duties.
229. To provide a fillip to the capital goods, consumer durables and automobile sectors,
and given our commitment to revive economic growth, I have already extended the excise
duty concessions beyond 30th June 2014 for a period of 6 months up to 31st December 2014.
We expect the industry to show positive results in the coming months.
230. In continuation, I have a few more proposals to boost domestic production.
Minimization of harvest and post harvest losses of agricultural produce is an important
measure for tackling food inflation and ensuring food security. The losses in fruits and
vegetables are mainly due to lack of adequate processing capacity. To incentivize expansion
of processing capacity, I propose to reduce the excise duty on specified food processing and
packaging machinery from 10 percent to 6 percent.
231. As a measure of relief to the footwear industry, most of which are in SME sector, I
propose to reduce the excise duty from 12 percent to 6 percent on footwear of retail price
exceeding ` 500 per pair but not exceeding ` 1,000 per pair. Footwear of retail price up to `
500 per pair will continue to remain exempted.
232. I propose to withdraw the concessional excise duty (2 percent without Cenvat benefit
and 6 percent with Cenvat benefit) on smart cards and levy a uniform excise duty at 12
percent. Consequently, imports will attract higher CVD. This will help domestic industry.
233.
To develop renewable sources of energy, I propose to exempt from excise duty:

EVA sheets and solar back sheets and specified inputs used in their manufacture;

solar tempered glass used in the manufacture of solar photovoltaic cells and
modules;

flat copper wire for the manufacture of PV ribbons for use in solar cells and
modules;

machinery and equipment required for setting up of a project for solar energy
production;

forged steel rings used in the manufacture of bearings of wind operated
generators;

machinery and equipment required for setting up of compressed biogas plants
(Bio-CNG).
234. To set at rest an on-going dispute, I propose to exempt PSF and PFY manufactured
from plastic waste and scrap including PET bottles from excise duty with effect from 29th
June, 2010 to 7th May, 2012. I also propose to levy prospectively a nominal duty of 2 percent
without Cenvat benefit and 6 percent with Cenvat benefit on such PSF and PFY.
235. To encourage sports, I propose to prescribe a concessional excise duty of 2 percent
without Cenvat benefit and 6 percent with Cenvat benefit on sports gloves.
236. While undertaking all these measures, I also need to mobilize resources. Accordingly,
I propose to increase the specific excise duty on cigarettes in the range of 11 percent to 72
percent. Similar increases are proposed on cigars, cheroots and cigarillos. Likewise, the
excise duty is being increased from 12 percent to 16 percent on pan masala, from 50 percent
to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutkha and
chewing tobacco. I also propose to levy an additional duty of excise at 5 percent on aerated
waters containing added sugar. These are healthy measures and I hope everyone would
welcome them from the point of view of human and fiscal health.
237. Clean Energy Cess is presently levied on coal, peat and lignite for the purposes of
financing and promoting clean energy initiatives and funding research in the area of clean
energy. I propose to expand the scope of purposes of levying the said cess to include
financing and promoting clean environment initiatives and funding research in the area of
clean environment. To finance these additional initiatives, I propose to increase the Clean
Energy Cess from ` 50 per tonne to `100 per tonne.
238.
I shall now deal with service tax.
239. In recent times, among indirect taxes, service tax has shown the highest rate of
growth. Since my overall objective is to prepare the indirect tax regime for a smooth
transition to Goods and Services Tax, changes have been kept minimal at this stage. The twin
objectives in this sector of indirect taxes are to widen the tax base and enhance compliance.
My proposals in relation to Service Tax are in line with these objectives.
240. To broaden the tax base in Service Tax, it is necessary to prune the negative list and
exemptions to the extent possible. Accordingly, the negative list has been reviewed and
service tax leviable currently, on sale of space or time for advertisements in broadcast media,
is being extended to cover such sales on other segments like online and mobile advertising.
Sale of space for advertisements in print media however would remain excluded from service
tax. Similarly, tax is being proposed on the service provided by radio-taxis to place them on
par with rent-a-cab service. These new levies will come into effect from a date to be notified
after the passing of the Finance Bill.
241. In furtherance of the effort to broaden the tax base, certain exemptions are being
withdrawn, including those extended to services by air-conditioned contract carriages and
technical testing of newly developed drugs on human participants.
242. To spur growth in certain sectors, I have tried to correct the bottlenecks which have
been brought to my knowledge. Indian shipping industry had been representing that they are
losing business in a tough global scenario, due to a provision in the Place of Provision of
Services Rules, which is now being addressed through an amendment. Similarly, to
encourage growth in the transport of goods through coastal vessels, the tax incidence is being
reduced. In response to the request of the tourism sector, services provided by Indian tour
operators to foreign tourists in relation to a tour wholly conducted outside India is being
taken out of the tax net. A long standing demand of this sector has been to allow Cenvat
credit for services of rent-a-cab and tour operators. I now propose to allow credit in the same
line of business.
243. I had to accept a few requests for exemptions from the social sector, since exemptioninduced distortion would be comparatively less in such sectors. At the request of the Ministry
of Agriculture, service tax on loading, unloading, storage, warehousing and transportation of
cotton, whether ginned or baled, is being exempted to bring it on par with certain other
agricultural produce. Services provided by the Employees’ State Insurance Corporation for
the period prior to 1st July 2012 is being exempted.
244. For the benefit of the common man, the exemption presently available for specified
micro insurance schemes is being expanded to cover all life micro-insurance schemes where
the sum assured does not exceed ` 50,000 per life insured. Since taxes should not come in the
way of safe disposal of medical and clinical wastes, services provided by common biomedical waste treatment facilities are being exempted.
245. Certain changes are also proposed for bringing about greater clarity and for reducing
litigation regarding the scope of exemptions. These include functions ordinarily entrusted to a
municipality and services in relation to education.
246. There are a few more decisions which entail small gains or losses of revenue. Certain
amendments are also being proposed in the Customs and Central Excise Acts and in the
Finance Act, 1994 relating to service tax. These changes are reflected in the budget
documents.
247.
My tax proposals on the indirect taxes side are estimated to yield ` 7,525 crore.
248. I have some more proposals which are in the nature of facilitating trade and resolving
disputes. I shall highlight only a few.
249. Faster clearance of import and export cargo reduces transaction costs and improves
business competitiveness. To help achieve these objectives, measures are being initiated to
extend the existing 24x7 customs clearance facility to 13 more airports in respect of all export
goods and to 14 more sea ports in respect of specified import and export goods.
250. It is also proposed to implement an ‘Indian Customs Single Window Project’ to
facilitate trade. Under this, importers and exporters would lodge their clearance documents at
a single point only. Required permissions, if any, from other regulatory agencies would be
obtained online without the trader having to approach these agencies. This would reduce
interface with Governmental agencies, dwell time and the cost of doing business.
251. The scheme of Advance Ruling in indirect taxes is being expanded to cover resident
private limited companies. This will allow these companies to seek advance ruling in respect
of new activities being proposed to be undertaken by them. The scope of Settlement
Commission is being enlarged to facilitate quick dispute resolution.
252. To expedite the process of disposal of appeals, amendments have been proposed in
the Customs and Central Excise Acts with a view to freeing appellate authorities from
hearing stay applications and to take up regular appeals for final disposal.
253.
Madam Speaker, with these words I commend the Budget to the House.